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Chapter 9- slide 1

Chapter Nine

New-Product Development andProduct Life-Cycle Strategies

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Chapter 9- slide 2Copyright 2010 Pearson Education, Inc.Publishing as Prentice Hall

New-Product Development andProduct Life-Cycle Strategies

New-Product Development Strategy

New-Product Development Process

Managing New-Product Development

Product Life-Cycle Strategies

Additional Product and Service

Considerations

Topic Outline

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New-Product Development

Reasons for new product failure

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Major Stages in New-Product Development

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Idea generation is the systematic searchfor new-product ideas

Sources of new-product ideas

Internal

External

Idea Generation

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Internal sources refer to the companys own formal

research and development, management and staff,

and intrapreneurial programs

External sources refer to sources outside the company

such as customers, competitors, distributors,

suppliers, and outside design firms

Idea Generation

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Identify good ideas and drop poor ideas

R-W-W Screening Framework: Is it real?

Can we win?

Is it worth doing?

Idea Screening

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Product idea is an idea for a possible productthat the company can see itself offering

to the market

Product concept is a detailed version of the

idea stated in meaningful consumer

termsProduct image is the way consumers

perceive an actual or potential product

Concept Development and Testing

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Concept testing refers to testing new-product

concepts with groups of target consumers

Concept Development and Testing

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Marketing strategy development refers to

the initial marketing strategy for

introducing the product to the market

Marketing strategy statement includes:

Description of the target market

Value proposition

Sales and profit goals

Marketing Strategy Development

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Business analysis involves a review of the

sales, costs, and profit projections to find

out whether they satisfy the companys

objectives


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Product development involves the creation

and testing of one or more physical versions bythe R&D or engineering departments

Requires an increase in investment


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Test marketing is the stage at which theproduct and marketing program areintroduced into more realistic marketing

settings

Provides the marketer with experience intesting the product and entire marketingprogram before full introduction


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Types ofTest Markets

Standard test markets

Controlled test markets

Simulated test markets

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New-Product DevelopmentProcess

Advantages of simulated test markets

Less expensive than other test methods Faster

Restricts access by competitors

Disadvantages

Not considered as reliable and accurate due to

the controlled setting


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When firms testmarket

New productwith largeinvestment

Uncertaintyabout product

or marketingprogram

When firms maynot test market

Simple lineextension

Copy ofcompetitorproduct

Low costs Management

confidence

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Commercialization is the introduction

of the new product

When to launch

Where to launch

Planned marketrollout


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Successful new-product development

should be:

Customer centered

Team centered

Systematic

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Customer-centered new product development

focuses on finding new ways to solve customerproblems and create more customer satisfying

experiences

Begins and ends with solving customer problems

New-Product Development Strategies

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Sequential new-product development is adevelopment approach where company

departments work closely togetherindividually to complete each stage of the

process before passing it along to the nextdepartment or stage

Increased control in risky or complexprojects

Slow


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Team-based new-product development is

a development approach where company

departments work closely together in

cross-functional teams, overlapping in the

product-development process to savetime and increase effectiveness


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Systematic new-product development is an

innovative development approach that

collects, reviews, evaluates, and managesnew-product ideas

Creates an innovation-oriented culture

Yields a large number of new-product ideas


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Product Life Cycle

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Product development

Sales are zero and investment costs mount

Introduction

Slow sales growth and profits are nonexistent

Growth

Rapid market acceptance and increasing profits.

Maturity

Slowdown in sales growth and profits level off ordecline

Decline

Sales fall off and profits drop


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Fads are temporary periods of

unusually high sales driven by

consumer enthusiasm and immediate

product or brand popularity

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Slow sales growth

Little or no profit

High distribution and promotion expense

Introduction Stage

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Sales increase

New competitors enter the market

Price stability or decline to increase volume

Consumer education

Profits increase

Promotion and manufacturing costs gain

economies of scale

Growth Stage

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Slowdown in sales

Many suppliers

Substitute products

Overcapacity leads to competition

Increased promotion and R&D to support

sales and profits

Maturity Stage

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Market modifying Product

modifying

Marketing mixmodifying

Maturity StageModifying Strategies

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Maintain the product

Harvest the product

Drop the product

Decline Stage

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Summary of Product Life Cycle

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Additional Product and ServiceConsiderations

Public policy and regulations regarding developingand dropping products, patents, quality, and

safety

Product Decisions and Social

Responsibility

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Additional Product and ServiceConsiderations

Determining what products andservices to introduce in which

countries

Standardization versus customization

Packaging and labeling

Customs, values, laws

International Product andService MarketingChallenges

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All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States ofAmerica.

Copyright 2010 Pearson Education, Inc.Copyright 2010 Pearson Education, Inc.

Publishing as Prentice HallPublishing as Prentice Hall

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